Important Tax Tips and Guidelines for Real Estate Investors
Owning, managing, selling and investing in Florida real estate can be a very profitable business, as well as an actual lifestyle for those who end up becoming full-time real estate investors.
The importance of keeping account of your taxes and of profiting from opportunities such as tax reductions and benefits, however, is something that many investors are unaware of, despite numerous sources encouraging them to keep their taxes organized to the best of their abilities.
Superior Tax Position with Florida Investments
In the US, the tax code is practically made for investors, providing them with a uniquely benefic position when they make housing and rental properties available to the population.
When you invest in Florida real estate, you basically end up with some of the most advantageous tax benefits in the entire US – and maybe the whole world. These include depreciation on rental real estate, selling your property and buying a replacement without paying anything on capital gains or limited capital gain tax rates on long term real estate investments.
Tax Tips to Consider
Our real estate experts have put together a list of some of the most useful tax tips you should take into account, especially when you don’t know much about investing in real estate yet:
- One of the best things you can do if you are a beginning investor without much knowledge about the taxes required for real estate purchases or rentals is to join a real estate club where you can find out as much as possible about your various options.
- Short term and long term investments generally have different requirements when it comes to managing taxes. A good thing would be to try and separate short term endeavors, such as wholesaling and rehabbing, from pursuits that may last longer than a year, such as rental real estate.
- Managing and selling rental property can be a great way of earning an income “like the wealthy” – by spending a smaller than average percentage on taxes. This can be done through rent-to-own proposals, fixing up a rental property and selling it 1-2 years later.
- In case you don’t know if you are a dealer or an investor, it might be a good idea to find out, since for tax purposes, this will ensure desired treatment depending on how the property is being handled.
- A good way of deducting a significant amount in terms of taxes per square foot of the property is to consider having renewable energy sources installed. Solar and other alternative energy can help you gain a significant amount of tax credits.
- Consider consulting a tax advisor or a licensed CPA with considerable real estate background in order to find out how to use these tips to the best of your advantage.
If you are a real estate investor, you also have to remember the crucial advantages of being organized, as well as the penalties that the IRS can push. Finding viable solutions for bookkeeping and managing your profits will be very important in the long run, if you want to be able to tie all the loose ends and run a successful real estate business.
